USD-JPY lifted above 105.00 for the first time since 2008, leaving a high of 105.03 before retreating to the 104.70 area following the Tokyo fix. EUR-JPY was a driver during the US-JPY ascent, and the cross also logged a new five-year peak of 144.21, as did GBP-JPY. Japanese data today showed headline core CPI rising more than expected to 1.2%, which is testament to the success of the BoJ's push to eventually achieve a 2% target, though other data, including production and housing spending, came in below forecasts, striking a chord with the criticism that Japan's inflation is too much of the cost-push type and not enough price-pull type. EUR-USD rose to a one-week high of 1.3769 after breaking above Monday's peak of 1.3717. Market commentaries report that thin, year-end markets have exacerbated movement today. AUD-USD was rose amid the general backdrop of the softening U.S. dollar. .

[EUR, USD]EUR-USD rose to a one-week high of 1.3769 after breaking above Monday's peak of 1.3717. Market commentaries report that thin, year-end markets have exacerbated movement, so we shouldn't perhaps read too much into the price action. EUR-USD had logged a two-week low to 1.3625 on Dec-20 following the Fed's dollar-supportive tapering announcement, so today's move completes a U-turn. Yen underperformance, meanwhile, has continued to underpin EUR-JPY, which logged a new five-year high. In EUR-USD, the recent multiple failures to sustain gains above 1.3800 makes this a key psychological resistance.

[USD, JPY]USD-JPY lifted above 105.00 for the first time since 2008, leaving a high of 105.03 before retreating to the 104.70 area following the Tokyo fix. EUR-JPY was a driver during the US-JPY ascent, and the cross also logged a new five-year peak of 144.21, as did GBP-JPY. Japanese data today showed headline core CPI rising more than expected to 1.2%, which is testament to the success of the BoJ's push to eventually achieve a 2% target, though other data, including production and housing spending, came in below forecasts, striking a chord with the criticism that Japan's inflation is too much of the cost-push type and not enough price-pull type. Resistance is marked at 105.00-105.10, trend support comes in at 104.25. We expect the yen to remain in decline as Japanese policymakers continue to effectively purse a soft currency strategy as part of their effort to drive core CPI to 2%.

[GBP, USD]Cable is nearing our 1.6500 target. Strong fundamentals and an associated favourable yield differentials support sterling. S&P last week affirmed the U.K. 's triple-A rating but kept a negative outlook, saying that the country would be vulnerable to a downgrade if growth was not sustained (the main risk to which stems from Eurozone). Cable has been in a bullish trend for six months, reflecting a trade-weighted appreciation of the currency over this time as U.K. recovery took hold. We anticipate more of the same during the early part of 2014. Forward looking survey evidence, such as from PMI order data, and the CBI industrial trends survey, strong mortgage lending figures (which signal house price potential two to four months down the track), support this view.

[USD, CHF]USD-CHF sank to a new low for the week toward 0.8900, reflecting broad dollar weakness, whicle the EUR-CHF cross has consolidated recent gains in the upper 1.22s. The EUR-CHF gain reflected an unwinding in the Swiss currency's safe haven premium as the period of Fed policy uncertainty ended with its decision to commencement QE tapering. EUR-CHF breached above 1.2250 last week, and is now well up on the pre-Fed eight-month low of 1.2166. Resistance comes in at 1.2280, marks a series of former lows seen between October and November. Support is now at 1.2220 and 1.2200.

[USD, CAD]USD-CAD has settled around 1.0600-50 after some choppy price action after making a major-trend peak of 1.0737 last week. The pair had since dipped to sub-1.06 levels on Monday's forecast-beating GDP data out of Canada, making a low of 1.0581 before finding a footing. The pair has been looking stretched technically, with prevailing levels having deviated above the 200-day moving average by a comparatively wide margin by historical standards (the average is presently situated at 1.0420). This conviction may have been strengthened by the repeated rejections from levels above 1.0700 over the last three weeks, and we may see a period of price stasis or a deeper correction over the coming weeks. Support is suggested by the Dec-12 low of 1.0561 and the 1.0550 level, between which are encompassed a multiple of former daily lows and daily highs that were recorded over the last six-months.